The Fed’s meeting minutes gives no sign of interest rate cuts

 

Stocks were down Tuesday as traders assessed the latest Federal Reserve meeting minutes, where officials gave no indication of interest rate cuts.

The Federal Reserve has expressed the need for a "restrictive" monetary policy due to concerns about stubborn or rising inflation, keeping the benchmark interest rate unchanged at 5.25 per cent to 5.5 per cent during their October meeting.

Fed funds futures indicate widespread expectations of no change in the Federal Open Market Committee's policy at its upcoming December meeting, with potential rate cuts anticipated starting in May.

Meanwhile, high interest rates have had a negative impact on the housing market, with October's existing home sales falling to 3.79 million units, the slowest pace since August 2010 and a 14.6 per cent decrease from the previous year.

However, investor optimism seems to have lifted, as approximately $23 billion flowed into equity funds last week, contributing to one of the highest totals in 2023, though slightly below the peak earlier in the year. This surge has reversed the recent trend of average net outflows, with a trailing four-week moving average of around $5 billion.

The Dow Jones Industrial Average slipped 62.75 points, or 0.18 per cent, to end at 35,088.29. The S&P 500 dipped 0.20 per cent, closing at 4,538.19, while the Nasdaq Composite fell 0.59 per cent to 14,199.98. Both the broad-market benchmark and the tech-heavy Nasdaq snapped a string of five consecutive winning days.

Lowe’s declined 3.12 per cent after reducing its full-year sales outlook. Clothing retailer American Eagle tumbled nearly 16 per cent after weaker-than-expected operating income guidance for the full year.

Meanwhile, e-commerce giant Amazon shed 1.53 per cent after CNBC’s David Faber reported, citing sources, that former CEO Jeff Bezos may be selling more shares. The billionaire offloaded 1.67 million shares last week.

Traders will also turn to earnings from Nvidia and HP. Nvidia shares hit an all-time high on Monday, but dipped 0.92 per cent on Tuesday.

Turning to US sectors, most closed lower overnight. Health was the best performer, whilst Tech was the worst.

Shifting to the Chinese markets, despite Beijing's efforts to boost confidence, over $25 billion worth of shares have been dumped by global investors in China's stock market, marking the departure of more than three-quarters of foreign capital that flowed in during the first seven months of the year. This selling trend is poised to result in the lowest annual net purchases by offshore investors since 2015 when the Stock Connect program linking Hong Kong and mainland China markets was initiated. 

Futures

The SPI futures are pointing to a 0.1 per cent fall.

Currency

One Australian dollar at 8:30 AM was buying 65.57 US cents.

Commodities

Gold added 1.02 per cent. Silver rose 0.90 per cent. Copper added 0.08 per cent. Oil fell 0.01 per cent.

Figures around the globe

European markets closed mostly lower. London’s FTSE fell 0.19 per cent, Frankfurt closed flat, and Paris closed 0.24 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei lost 0.10 per cent, Hong Kong’s Hang Seng fell 0.25 per cent while China’s Shanghai Composite closed 0.01 per cent lower.

The Australian share market closed 0.28 per cent higher at 7078.

Ex-dividends
Nufarm (ASX:NUF) is paying 5 cents unfranked
US Student Housing REIT (ASX:USQ) 0.5292 cents unfranked

Dividends payable
Brickworks (ASX:BKW)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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